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Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the d

Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the dollar by Microsoft.

DenisM 1y ago
Could you elaborate? Not looking for a proof, just want to understand your train of thought. Always liked your commentary. Thanks!
- hshdhdhehd 1y ago
  Probably predicting either pop of AI bubble like dotcom in 1999 or the OpenAI emperor has no clothes and the marker sees its shrunk hunk.
- dmbche 1y ago
  Spitballing There is no clear path to the trillion dollars today. By IPOing, the owners (who have a good idea of where it's going) can exchange their ticket to the trillion for cash today. Seems like a bad deal unless you know the ticket won't get called. Then you've just made bank. And you might have noticed some form of hype around AI these last few years - arguably this could be to make the trillion dollar seem more realistic and therefore making the owners more money when selling their ticket to it.
- jacquesm 1y ago
  An IPO is traditionally thought of as a way to raise capital in amounts that are not available privately, but more recently IPOs are just a way to transfer vast amounts of wealth from speculating retail and institutional investors to stakeholders. The IPO itself is the least interesting thing: if Microsoft wanted they could avoid the IPO and instead offer to buy the shares beforehand. If the financial future of OpenAI is not as rosy as they say it is then there is a fair chance that post IPO the stock will not rise. There are plenty of signs that this is the case, including the 'erotic' version of ChatGPT slated for release in December, the strong push to monetize even the most inane interactions and the mention of advertising as a possible source of income. All of those combined tell me that OpenAI is seriously worried about their bottom line. But Microsoft already has a bottom line and AI is the one way in which they could put one over on Google, which they've been dying to do for many years. So the logical progression to me seems to be: - do the IPO, everybody associated with OpenAI will be filthy rich (including MS) - attempt to polish up the financials - if that fails activate plan B, have Microsoft make an offer to take OpenAI private again The hype around this IPO increases the chance the stock will drop post IPO.
empath75 1y ago
Open AI will probably have the highest market cap of any company in the world on the opening day of trading.
- sipjca 1y ago
  that would be certifiably insane
vessenes 1y ago
Jacques, I've been reading and enjoying your posts here for at least 15 years. (Thank you for your service.) But I think you're totally incorrect on this; oAI is going to be one of the enduring tech consumer brands built in this half of the 21st century.
- bazmattaz 1y ago
  Why do you say so? They’re burning cash and don’t currently have a viable path to profitability. Sure they have millions of MAU but not many paying ones.
  - deleted 1y ago
    [deleted]
  - laluser 1y ago
    Look at all the companies that have 'burned cash' with no viable path to profitability over the last 20 years. The good ones outlive that criticism, easily. Think Uber, etc. They clearly see a path to profitability and they have plenty of room to experiment here with what works. With new partnerships and dependencies, they won't run out of cash for a long time.
    - nmfisher 1y ago
      I don’t know the exact numbers, but I feel like OpenAI raised far more money than those companies, burned through it far quicker and has much more competition with a much shakier value proposition. They definitely have a strong consumer brand so it’s not like they’re going to disappear, but I understand the bear case.
      - laluser 1y ago
        Sam A is pretty well connected and knows the game well. No doubt there will be some risks where the whole thing goes right down to zero, but I personally wouldn't bet against them.
bwfan123 1y ago
my prediction is that the ai-bubble pops no later than when openai files for its ipo. openai has an incentive to keep its finances outside of the prying eyes of the public shareholders. This way their mystique is kept in tact, and nobody can question their capex and datacenter investment claims. But, it is becoming difficult since msft now reports on their openai holdings.
Libidinalecon 1y ago
I have always thought it would eventually be owned my Microsoft. The only uncertainty is the path it takes to get there. Given the froth in the market right now, I think there is a good chance the IPO gets scrapped if we are talking mid 2026. An IPO at a trillion would work right now but mid 2026 is a long ways away. Like how the Deepseek moment feels like ancient history but it wasn't even a year ago.

Prediction for the future: OpenAI IPO's lots of money changes hands, it chugs along for a while, hits a hard spot and then is taken private for pennies on the dollar by Microsoft.

DenisM 1y ago

Could you elaborate? Not looking for a proof, just want to understand your train of thought. Always liked your commentary. Thanks!

hshdhdhehd 1y ago
Probably predicting either pop of AI bubble like dotcom in 1999 or the OpenAI emperor has no clothes and the marker sees its shrunk hunk.
dmbche 1y ago
Spitballing There is no clear path to the trillion dollars today. By IPOing, the owners (who have a good idea of where it's going) can exchange their ticket to the trillion for cash today. Seems like a bad deal unless you know the ticket won't get called. Then you've just made bank. And you might have noticed some form of hype around AI these last few years - arguably this could be to make the trillion dollar seem more realistic and therefore making the owners more money when selling their ticket to it.
jacquesm 1y ago
An IPO is traditionally thought of as a way to raise capital in amounts that are not available privately, but more recently IPOs are just a way to transfer vast amounts of wealth from speculating retail and institutional investors to stakeholders. The IPO itself is the least interesting thing: if Microsoft wanted they could avoid the IPO and instead offer to buy the shares beforehand. If the financial future of OpenAI is not as rosy as they say it is then there is a fair chance that post IPO the stock will not rise. There are plenty of signs that this is the case, including the 'erotic' version of ChatGPT slated for release in December, the strong push to monetize even the most inane interactions and the mention of advertising as a possible source of income. All of those combined tell me that OpenAI is seriously worried about their bottom line. But Microsoft already has a bottom line and AI is the one way in which they could put one over on Google, which they've been dying to do for many years. So the logical progression to me seems to be: - do the IPO, everybody associated with OpenAI will be filthy rich (including MS) - attempt to polish up the financials - if that fails activate plan B, have Microsoft make an offer to take OpenAI private again The hype around this IPO increases the chance the stock will drop post IPO.

empath75 1y ago

Open AI will probably have the highest market cap of any company in the world on the opening day of trading.

sipjca 1y ago
that would be certifiably insane

vessenes 1y ago

Jacques, I've been reading and enjoying your posts here for at least 15 years. (Thank you for your service.) But I think you're totally incorrect on this; oAI is going to be one of the enduring tech consumer brands built in this half of the 21st century.

bazmattaz 1y ago
Why do you say so? They’re burning cash and don’t currently have a viable path to profitability. Sure they have millions of MAU but not many paying ones.
- deleted 1y ago
  [deleted]
- laluser 1y ago
  Look at all the companies that have 'burned cash' with no viable path to profitability over the last 20 years. The good ones outlive that criticism, easily. Think Uber, etc. They clearly see a path to profitability and they have plenty of room to experiment here with what works. With new partnerships and dependencies, they won't run out of cash for a long time.
  - nmfisher 1y ago
    I don’t know the exact numbers, but I feel like OpenAI raised far more money than those companies, burned through it far quicker and has much more competition with a much shakier value proposition. They definitely have a strong consumer brand so it’s not like they’re going to disappear, but I understand the bear case.
    - laluser 1y ago
      Sam A is pretty well connected and knows the game well. No doubt there will be some risks where the whole thing goes right down to zero, but I personally wouldn't bet against them.

bwfan123 1y ago

my prediction is that the ai-bubble pops no later than when openai files for its ipo. openai has an incentive to keep its finances outside of the prying eyes of the public shareholders. This way their mystique is kept in tact, and nobody can question their capex and datacenter investment claims. But, it is becoming difficult since msft now reports on their openai holdings.

Libidinalecon 1y ago

I have always thought it would eventually be owned my Microsoft. The only uncertainty is the path it takes to get there. Given the froth in the market right now, I think there is a good chance the IPO gets scrapped if we are talking mid 2026. An IPO at a trillion would work right now but mid 2026 is a long ways away. Like how the Deepseek moment feels like ancient history but it wasn't even a year ago.